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"The biggest benefits of being on a program is having credit card interest rates lowered and getting all my bills paid on time."Roland H., Medina, OHCareOne Customer

Do You Need Debt Relief?

Feeling overwhelmed by your debts? Having trouble making ends meet? Unable to get ahead of your credit card debts? A Debt Relief plan may be your solution to getting control of your finances.

Debt relief is referred to in many ways. For example, credit counseling, debt management and credit assistance are terms that are commonly used to refer to a repayment plan that helps you pay off unsecured debts. Unsecured debts include accounts such as:

  • Credit cards
  • Department store cards
  • Medical bills
  • Legal fees
  • Student loans
  • Accounts in collections

Find a Company You Trust

If you're struggling to meet the minimum payments on your unsecured debts, a debt relief plan may be for you. There are many companies that provide debt relief services so make sure you do business with a company you trust. You can check out different providers through the Better Business Bureau to see if there are any consumer complaints against the company with which you're considering doing business. It's also a good idea to comparison shop the debt relief programs offered by several companies. You want to make sure you are getting the best possible deal for your situation. See the Better Business Bureau's tipsheet on Choosing a Credit Counseling Agency.

Benefits

Debt relief plans a debt help tool you if you're delinquent or having difficulty making your regular minimum payments and are designed to offer a good alternative to filing bankruptcy. Since creditors have a financial interest in recovering the money they've loaned, many are willing to provide benefits and make contributions to help fund the plans. These benefits typically take effect after you've made three timely and consecutive payments on the plan.

In working with debt relief plans, creditors may offer the following adjusted terms to help you get out of debt:

  • Lower interest rates
    • This is one of the most important benefits to help you get a handle on your debts. With a lower interest rate, more of your payment is applied to the principal of your debt, and your debt decreases faster.
  • Lower monthly payment
    • If you're having trouble meeting your regular minimum payments, this benefit helps you get a handle on your debts as you make consistent monthly payments. A consistent payment history, reflected on your credit report, is crucial in maintaining good credit.
  • Eliminate late and over limit fees
  • One monthly payment
    • This benefit makes it easier for you to keep on a regular payment schedule. Some plans automatically debit your bank account once a month and make payments to your creditors. You don't even have to write the checks for your bills.

In addition, the debt relief plan may include education on personal financial management. Topics usually covered range from being a smart consumer of credit products, wise budgeting, smart savings practices, and how to handle debt problems. The purpose is to provide information that helps you learn more about financial principles, how they apply to your situation, and ultimately how that might translate into your being able to manage your finances more successfully.

Considerations

Debt relief plans are not intended as an easy way to get out of debt. Creditors will approve your participation in a debt relief plan if you are in need of assistance. It's important to understand that in exchange for the benefits they provide, your creditors:

  • Will have you place all your unsecured accounts on the plan
    • Creditors generally require this to ensure your commitment to reducing your debt to a manageable level.
  • Will not allow you to incur additional unsecured debt while on the plan
    • Creditors close your accounts to keep you from charging additional purchases or cash advances. If you feel you can't live without a credit card, you might consider getting a secured credit card or a debit card to use while you're on the plan. See the related articles about secured credit cards and debit cards in the CareOne Credit Knowledge Center Library. You may be able to obtain a secured loan for a home or car while you are on the plan. Lenders appear increasingly understanding about credit problems, and many have established loan programs that you can qualify for after you have been on a debt relief plan for a minimum required amount of time.

The Enrollment Process

The CareOne Credit Debt Relief Plan is one you may want to explore. The first step in the process is to provide personal information and complete a budget analysis to ensure this is the right program for you. Your creditor information is then entered, and a new monthly payment amount is calculated. If the payment plan works for your situation, all you do is sign a set of agreements that contain the detailed plan information. As soon as you sign your agreement, you'll be enrolled. Your creditors will receive a proposal asking them to confirm which benefits will be offered to you. Your creditors have the right to change the requested payment amount or decline participation in the program, but this doesn't happen very often. Remember, it may take three consecutive payments on the plan before your creditors apply benefits to your accounts.

When you're on the program, you'll receive monthly statements breaking down how your payments were disbursed to your creditors. You may also continue to receive statements from your creditors. It's important to review these every month to ensure your payments are credited appropriately, and you're reducing your debt as planned. As you pay off individual creditors, the money being paid to them is reallocated to your other creditors. Your monthly payment remains the same, and you'll be completely debt free in about five years.

Is it Right For You?

A Debt Relief plan is a good option if:

  • You can't pay more than the minimum amount due on your debts
  • Your account balances are increasing due to interest and other fees
  • You feel like you're falling further and further behind

For more information about debt management, read the related articles in our Knowledge Center Library.

Take control of your finances with our debt help tools. Use our calculators and budget planner to help you manage your money.

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